Open Europe is holding an event in conjunction with Policy Exchange in London on Monday 12 July from 2 - 4pm, entitled "EU supervision and regulation in the securities markets: Will one size fit all?" Speaking at the event will be: Salvatore Gnoni, European Commission; Kay Swinburne MEP; and William Underhill, Slaughter & May - Chairman of the City of London Law Society's Company Law Committee. The event will be chaired by Open Europe Director Mats Persson.
Places are limited. If you would like to attend, please RSVP to Vincenzo Scarpetta on 0044 (0)207 197 2333 or firstname.lastname@example.org
ING research suggests one-off effects of eurozone break-up "would dwarf Lehman Brothers collapse";
Former Thyssen Chairman calls for Northern monetary union
A new report from Dutch bank ING, entitled "Quantifying the Unthinkable", has warned that the break-up of the eurozone "would have effects that dwarf the post Lehman Brothers collapse". It predicts that a new Greek drachma would crash by 80pc against the new Deutschmark, and the currencies of Spain, Portugal, and Ireland would fall by 50pc or more, causing inflation to soar into double-digits. It goes on to suggest that the German sphere would face a "deflationary shock" and the US dollar would rocket to 85 cents against the euro equivalent, with a "temporary overshoot" to near 75 cents. This would tip the US into acute deflation, threatening North America with a double-dip recession.
However, the analysis also admits that it doesn't take into account the long-term costs of keeping the eurozone intact, noting "Some argue that the current sovereign debt crisis has exposed EMU as not being what economists would call an optimal currency area. We do not address the potential long-term pros and cons of dismantling EMU here."
In an interview in Handelsblatt, Dieter Spethman, former Chairman of Thyssen, who has joined four professors in challenging the eurozone bailout at the German Constitutional Court, argues that Germany should create a new Northern monetary union with the Netherlands and Scandinavia. He also suggested that France could join, as well as Russia, "as a counterbalance". He concludes that the German government will fail to reform the eurozone, and instead the federal government "will ruin Germany if it continues like this".
Meanwhile, the new German President, Christian Wulff, has asked the EP for understanding of German concerns over calls for financial transfers between EU member states, saying that, as a federal state, Germany has had "mixed experiences" with internal financial transfers.
EU's stress tests will largely dodge question on risk of sovereign debt;
Robert Peston: Tests "may sow alarm rather than calm"
The WSJ reports that the EU's Committee of European Banking Supervisors (CEBS) has said that stress tests will cover 91 banks and 65 percent of the region's banking assets. However, the FT notes that the CEBS did not reveal the nature of the stress tests for the banks' sovereign debt holdings, the biggest area of concern for investors.
In the Mail, Alex Brummer comments, "It is somewhat astonishing that three years after the credit crunch only now are European Union regulators conducting the kind of stress tests that Britain and the United States went through in the wake of the Lehman collapse in the Autumn of 2008." On his BBC blog, Robert Peston writes that the stress test "is shaping into a bungled exercise that may sow alarm rather than calm."
MEPs want all three of EU's new financial supervisors to be based in Frankfurt
The European Parliament voted yesterday on a series of amendments to the Commission's proposals for the creation of the three new European Supervisory Authorities (ESAs) and of the European Systemic Risk Board (ESRB). However, MEPs deferred the final vote on the legislative resolution in order to buy more time for negotiations with the Council in September. De Standaard reports that the Belgian EU Presidency is resolved to use qualified majority voting to outvote the UK, which is opposed to the proposals.
European Voice notes that the EP is still holding out for positions that have been rejected by EU finance ministers - for example, on what extra powers ESAs would be given in case a crisis occurs, which institutions would be entitled to determine the existence of an "emergency situation" and how easy it would be for member states to veto the ESAs' decisions. Stuart Fraser, Policy Director of the City of London, is quoted by the FT saying: "We want [national regulators] to be given maximum discretion on supervision. We can't have one size fits all in Europe". The WSJ notes that MEPs also voted for all three EU supervisors to be based in Frankfurt "in order to ease interaction" among them.
Commission's proposed pensions shake-up could cost UK firms £500bn and include 'peer review' of member states' pension systems
The Telegraph reports that the European Commission's Green Paper on pensions, published yesterday, could end up forcing pension schemes to adopt the EU's so-called Solvency II capital rules that, according to the CBI, would cost firms an additional £500bn in pension contributions. The Green Paper also calls for "A common platform for monitoring all aspects of pension policy and regulation in an integrated manner" as well as a system of "peer review" for member states' pension systems. The Express quotes Open Europe's Stephen Booth saying, "Pension reform is certainly needed across Europe but this should not be used as an excuse by the EU to further the creation of an economic government. This would be a very worrying step towards EU interference into individual countries' welfare and social security systems."
Brussels fines UK £150m for failing to fly the EU flag at funded projects
The Mail and Telegraph report that the EU has fined Britain more than £150 million for failing to display the EU flag as part of EU funded projects. The fines relate to the £3.8billion given to the UK by the European Regional Development Fund, which has strict rules on the display of the EU flag on any project accepting cash.
Top Commission official: EU decision-making under Lisbon Treaty still "too slow"
The Parliament reports that Catherine Day, Secretary General of the European Commission, has said that, despite the Lisbon Treaty, the current EU decision-making process was still "too slow", adding: "We need to fast-track key pieces of legislation", without elaborating what those were.
MEPs back new bank bonus curbs
MEPs yesterday voted by 625 to 28 in favour of new rules to curb bankers' bonuses, which will see bankers required to defer 40 to 60 percent of bonuses for three to five years, while half of any immediate bonus must be paid in shares or in other securities linked to the bank's performance. As a result, bankers will only be able to receive between 20 and 30 percent of any bonus in upfront cash. The legislation calls on national regulators to implement the rules by January 2011, reports the FT. The rules already have the backing of member states - who will likely rubber-stamp them in a meeting of finance ministers next Tuesday. The WSJ reports that EU officials said the rules would apply to banks and investment firms, but not hedge-fund managers, though they would apply to investment firms that manage hedge-fund assets.
The Mail quotes Michael Connarty, former Chair of Parliament's European Scrutiny Committee, saying: "There has been a call for tougher rules for some time but it should be up to the UK parliament, not the EU, to come up with the proposals." The Telegraph reports that lawyers for the FSA are exploring ways of trying to gain an exemption for the UK from the rules.
EU Data Protection Supervisor: EU-US data sharing agreement does not contain sufficient protection of personal information
Germany's Die Welt reports that the EU's Data Protection Supervisor, Peter Hustinx, has sharply criticised the new agreement on sharing banking data between the EU and the US. The so called Swift agreement violates the privacy of citizens and is "everything but satisfactory" says Hustinx. "The requests potentially include thousands, if not millions of transfers, including yours and mine," he added.
Meanwhile, the Irish Times reports that the Irish government has moved to block a Commission initiative allowing the transfer of personal European citizen data to Israel, following the use of eight fake Irish passports by the alleged Israeli assassins of a Hamas operative earlier this year.
Open Europe's Mats Persson is quoted by the American Spectator arguing that any future EU treaty change should be used by David Cameron to repatriate powers to Britain.
Commission demands billions more from member states as research project runs over budget
European Voice reports that the Commission is demanding more money from member states to cover the rising costs of the construction of an experimental fusion reactor, ITER. The EU's required financial contribution to ITER's construction is currently estimated at €7.2 billion, compared to an initial estimate of €2.7bn. Member states are insisting that the money be found from elsewhere in the EU budget.
Commissioner wants "European supervisory authority" for oil drilling
Günther Oettinger, EU Commissioner for Energy, has called on member states to forbid any expansion of deep-water oil drilling off their coasts until investigations into the causes of the oil leak in the Mexican Gulf have been completed. EUobserver quotes him saying, "It would be a good idea to have overarching European standards and a European supervisory authority".
Italian news agency Asca reports that yesterday the EU entered into official talks with the Council of Europe in order to gain accession to the European Convention on Human Rights (ECHR).
In a debate on the EU's diplomatic service in the European Parliament yesterday, Conservative MEP Charles Tannock said that, "The British Conservatives are reconciled and ready to engage with the service", adding that national MPs would need to be involved in the scrutiny of the EEAS and EU defence missions.
The Independent reports that the UK will run out of landfill sites in less than eight years time. Unless the amount of rubbish being disposed is reduced, the UK will face fines of up to £180 million a year by 2020 for not being able to meet its EU targets.
Conservative Home notes that Bill Cash, MP for Stone, has been nominated unopposed to chair the House of Commons European Scrutiny Committee.
Iain Dale's blog suggests that David Cameron last week proposed that current leader of the ECR grouping in the EP Michal Kaminski, and leader of the Conservatives in the EP Timothy Kirkhope share chairmanship of the grouping, without other MEPs in the grouping being consulted, which has caused "uproar" in Brussels.
Writing in Dutch newspaper De Pers, journalist Peter Wierenga argues that "We don't need the EU at all...Take Norway: no EU member and nevertheless the second highest GDP per capita in the world...Just negotiate a treaty with Brussels, and you can trade just as easily."
Euractiv reports that the European Parliament has approved the Industrial Emissions Directive (IED), strengthening pollution limits on industrial installations. "The IED is a reasonable compromise," said Nigel Burdett, the Head of Environment at Drax - Europe's largest coal-fired power station, according to the Independent.
The European Commission will next week propose rules to make it easier for non-EU citizens to come and work in the EU as "seasonal workers".
Les Echos reports that Iveta Radicova will today be appointed as the new Slovakian Prime Minister. Ms. Radicova will head a coalition government formed by four centre-right parties.
Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: openeurope.org.uk or call us on 0207 197 2333.